Warren Buffett is one of the world’s top investors and has amassed his company, Berkshire Hathaway, as well as himself, a massive amount of wealth totaling over $60 billion by investing his money wisely. The way Buffett made his billions and started the Berkshire Hathaway company could not be more simple.
Buffett recommends that the average trustee should accumulate wealth exactly has he has done it. The formula is very simple when he states that you should invest 10% of your funds in short-term government bonds and the other 90% in a variety of very-low-cost S&P 500 index fund. These funds will tend to outperform pensions or other high-fee managed portfolios. However, if your employer provides a 401k or another avenue of saving for retirement, feel free to use that as well to compliment your own personal savings program.
The other perks to these sorts of investments are that they require little if any hands-on trading or maintenance. Essentially, these sorts of investments allow people to purchase their investments and leave them to accumulate wealth for them going into the future. Little active work is required to maintain these funds, which makes them a tantalizing prospect to many investors who do not want to spend time trading and managing funds, but rather just letting the funds work for them.
More great news about mutual funds is that the threshold of the investments you have to have to receive very low maintenance fees are also low. For example, Vanguard offers several S&P funds that generally run between a 0.05 and 0.04 expense ratio. These are generally considered rock-bottom expense ratios and you will be very hard-pressed to find something with a lower ratio than that. That means you are investing more and saving it for retirement rather than paying someone to manage your account. This extra money can make the difference when you go to retire as it compounds interest on your investments for a 30+ year career.